Russia's SIBUR to focus production on core polymer segment: Konov

Russian petrochemical major, Sibur will focus its core activities in the polymer and rubbers segments, Sibur's chief executive, Dmitry Konov said at a news conference in London, Tuesday.

In restructuring its business, Sibur will seek to divest its non-core fertilizer and tire manufacturing business, Konov said.

The company, citing an expected medium-term increase in Russian polymer demand, said it was targeting the domestic Russian market. Although there was no population growth, consumption of polymers was expected to grow through substitution, particularly in construction. The company was not fearful of any drop in consumption since its output could be competitively priced in the European market, Konov said.

The company started expandable polystyrene production at its site in Perm in the fourth quarter of 2010 and the company plans to expand in other polymers such as polypropylene and poly vinyl chloride. The company produces 50,000 mt/year of EPS at the Perm site.

By 2016 the company expects polypropylene production to increase from around 260,000 mt/year currently to almost 1 million mt/year, Konov said.

Polypropylene demand in Russia has grown at double-digit rates annually since 2003, except in 2009 when the global economic crisis struck, Konov added. PP's growth rate has averaged at around 12% over the past several years, and Konov was confident that this level of growth would be sustainable sustainable over the next five years. The company also expected overall domestic polymer demand growth would be 17% through 2015 and for polymer sales to increase 35% over the near term.

Russian businessman Leonid Mikhelson, purchased a 25% stake in Sibur in December 2010 under his investment vehicle, Miracle. The company hopes to acquire the remaining 75% of the company's stock by the end of the year.